EUR/USD Fundamental Analysis – July 17, 2015 – Forecast

Analysis and Recommendations:

The EUR/USD fell to its lowest month in the past months down by 48 points to 1.0902 as traders prepared for Mario Draghi’s press conference while the US dollar was supported by Janet Yellen’s testimony before US lawmakers. The diverging bank policies are sending the currency in search of a new bottom. The euro fell to the lowest level in more than six weeks against the dollar amid speculation European Central Bank President Mario Draghi will recommit to seeing through the whole course of his bond-buying plan.

The five-year, five-year forward inflation swap rate, a market metric identified by Draghi as a benchmark for the euro area’s inflation outlook, fell two basis points, or 0.02 percentage point, to 1.78 percent. The ECB targets price growth at just below 2 percent.

Late last night, Greece’s parliament approved the bailout package presented by Prime Minister Alexi Tsipras. The deal is far worse and more austere on what the nation voted “No” on in the bailout referendum on July 5. Not only has the Syriza-led government agreed to a number of extremely austere measures, such as further pension cuts and labour reforms, it’s also being forced to chop up and sell parts of the country to the private sector so it can recapitalize the battered banking sector.

While Tsipras can now begin working with Greece’s European creditors to get an actual bailout and funding back to the Greek economy, which has basically been shuttered in the last 2 and a half weeks, this does not solve the riddle of how on earth the country is going to keep on borrowing and adhering to conditions for the long term.

Today eurozone finance ministers will hold a phone conference to formally open a new round of talks over a three-year bail-out. They are also likely to approve a €7bn loan to Greece to help it make its debt repayments in July.  There will also be the ECB’s latest decision on funding for Greek banks. Most analysts expect the liquidity assistance to remain in place. On Friday, the German Bundestag will vote on whether or not to approve a new rescue. Finland and Austria’s parliaments will do the same. All three legislatures will need to pass a vote by a majority.  However, talks over securing a new €86bn bail-out are likely to last for another four weeks.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Thursday, July 17, 2015

Government Bond Auctions

Date Time Country

Jul 16 10:30 Spain Auctions 0.25%

Jul 16 11:10 France Eur 7-8bn

Jul 16 12:10 France Eur

Jul 16 17:00 US Details 10-year TIPs